Financial Comparison: UMB Financial (NASDAQ:UMBF) & 1st Source (NASDAQ:SRCE)

1st Source (NASDAQ:SRCE) and UMB Financial (NASDAQ:UMBF) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, risk, institutional ownership, profitability and valuation.

Earnings and Valuation

This table compares 1st Source and UMB Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
1st Source	$600.00 million	2.75	$158.28 million	$6.41	10.59
UMB Financial	$4.14 billion	2.04	$702.40 million	$9.13	12.15

UMB Financial has higher revenue and earnings than 1st Source. 1st Source is trading at a lower price-to-earnings ratio than UMB Financial, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares 1st Source and UMB Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
1st Source	26.38%	12.44%	1.75%
UMB Financial	16.90%	12.14%	1.19%

Analyst Recommendations

This is a breakdown of current ratings and price targets for 1st Source and UMB Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
1st Source	0	3	2	0	2.40
UMB Financial	0	2	10	2	3.00

1st Source presently has a consensus target price of $75.33, indicating a potential upside of 11.00%. UMB Financial has a consensus target price of $141.18, indicating a potential upside of 27.23%. Given UMB Financial’s stronger consensus rating and higher possible upside, analysts plainly believe UMB Financial is more favorable than 1st Source.

Institutional & Insider Ownership

74.5% of 1st Source shares are held by institutional investors. Comparatively, 87.8% of UMB Financial shares are held by institutional investors. 19.6% of 1st Source shares are held by insiders. Comparatively, 5.5% of UMB Financial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk and Volatility

1st Source has a beta of 0.63, indicating that its stock price is 37% less volatile than the S&P 500. Comparatively, UMB Financial has a beta of 0.78, indicating that its stock price is 22% less volatile than the S&P 500.

Dividends

1st Source pays an annual dividend of $1.60 per share and has a dividend yield of 2.4%. UMB Financial pays an annual dividend of $1.72 per share and has a dividend yield of 1.5%. 1st Source pays out 25.0% of its earnings in the form of a dividend. UMB Financial pays out 18.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. 1st Source has increased its dividend for 38 consecutive years and UMB Financial has increased its dividend for 32 consecutive years. 1st Source is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

UMB Financial beats 1st Source on 11 of the 18 factors compared between the two stocks.

About 1st Source

1st Source Corporation operates as the bank holding company for 1st Source Bank that provides commercial and consumer banking services, trust and wealth advisory services, and insurance products to individual and business clients. Its consumer banking services include checking and savings accounts; certificates of deposit; individual retirement accounts; online and mobile banking products; consumer loans, real estate mortgage loans, and home equity lines of credit; and financial planning, financial literacy, and other consultative services, as well as debit and credit cards. The company also offers commercial, small business, agricultural, and real estate loans for general corporate purposes, including financing for industrial and commercial properties, equipment, inventories, accounts receivables, and renewable energy and acquisition financing; and commercial leasing, treasury management, and retirement planning services. In addition, it provides trust, investment, agency, and custodial services comprising administration of estates and personal trusts, as well as management of investment accounts for individuals, employee benefit plans, and charitable foundations. Further, the company offers equipment loan and lease products for construction equipment, new and pre-owned aircraft, auto and light trucks, and medium and heavy duty trucks; and finances construction equipment, aircrafts, medium and heavy duty trucks, step vans, vocational work trucks, motor coaches, shuttle buses, funeral cars, automobiles, and other equipment. Additionally, it provides corporate and personal property, casualty, and individual and group health and life insurance products and services. 1st Source Corporation was founded in 1863 and is headquartered in South Bend, Indiana.

About UMB Financial

UMB Financial Corporation operates as the bank holding company that provides banking services and asset servicing in the United States and internationally. The Commercial Banking segment provides commercial loans and credit card; commercial real estate financing; letters of credit; loan syndication, and consultative service; various business solutions including asset-based lending, mezzanine debt, and minority equity investment; and treasury management service, such as depository service, account reconciliation, cash management tool, accounts payable and receivable solution, electronic fund transfer and automated payment, controlled disbursement, lockbox service, and remote deposit capture service. The Institutional Banking segment offers fund, asset management, and healthcare service to institutional clients; and fund administration and accounting, investor service and transfer agency, mutual fund service, alternative investment service, fixed income sale, trading and underwriting, and corporate trust and escrow service, as well as institutional custody service. This segment also provides healthcare payment solution includes custodial service for health saving accounts and private label, multipurpose debit cards to insurance carriers, third-party administrator, software companies, employers, and financial institutions. The Personal Banking segment offers deposit account, retail credit card, private banking, installment loan, home equity line of credit, residential mortgage, as well as internet banking, ATM network, private banking, brokerage and insurance service, and investment advisory, custody, and trust services. It operates through a network of branches and offices. The company was founded in 1913 and is headquartered in Kansas City, Missouri.